The IRS did not audit Trump during his presidency's first 2 years
Updated December 21, 2022 at 1:20 PM ET
After the Democratic-controlled House Ways and Means Committee announced the Internal Revenue Service failed to audit former President Donald Trump during the first two years of his presidency, it voted along party lines to release its findings, as well as all additional documentation.
Part of that release late Tuesday night included a separate report from the nonpartisan Joint Committee on Taxation, which outlined the numbers behind its own findings and suggestions for the IRS.
What the numbers show
That report looking into Trump's tax returns from 2015-2020 raised questions about just what an IRS audit would have uncovered in terms of tax liability.
The report very clearly stated the Joint Committee on Taxation "did not have any investigatory powers." On page 1, the committee states: "we express no opinion regarding whether any adjustment, or increase or decrease in tax, would have resulted if these issues had been pursued on examination." This message is repeated throughout the nearly 40-page document.
Still, the report found many areas of additional interest. In both 2017 and 2020, the former president reported no taxable income on his personal, joint return with wife Melania Trump. Further, in 2016, the former president reported just $978 in wages for the year, though his income mostly came (in all six years examined) from capital gains, taxable interest and ordinary dividends.
In 2016 and 2017, he paid just $750 in net tax on his income. In 2020, he paid $0 in net tax on his income. He reported millions in losses across various areas of personal and business income during his time in the White House.
U.S. presidents earn $400,000 in annual salary and Trump was no exception. He pledged to donate that salary while in office.
In each year examined, from 2015 to 2020, the president reported income from related-party loans made to his children ranging from $46,000 to $51,000. This caused the committee to question whether these transactions were legitimate "arms length" or potential gifts that, in turn, should have triggered gift tax and don't qualify for interest deductions for related borrowers.
While president, Trump claimed foreign tax credits in 2018 of more than $1 million, which the committee suggests warrants further review.
In addition, Trump claimed charitable contributions in large amounts ranging from $500,000 to $2 million, with a $21.1 million charitable contribution claim in 2015, prior to his becoming president. The committee noted that in many years, these contributions did not impact tax liability (because there wasn't any) but that carryover contributions might in the future. The group flagged that this might have triggered an IRS inquiry about whether such large cash contributions were substantiated.
Ways and Means Democrats want more done in the future
The House Ways and Means Committee in its own report said it found that only one audit was started while Trump was in office and no audits were completed.
This is in violation of standing IRS policy.
"The Committee expected that these mandatory audits were being conducted promptly and in accordance with IRS policies," Committee Chairman Rep. Richard Neal, D-Mass., said in a statement. "However, our review found that under the prior administration, the program was dormant. We know now, the first mandatory audit was opened two years into his presidency. On the same day this Committee requested his returns."
In a vote split along party lines, the Democrats on the panel voted in support of the release while Republicans voted against the measure.
Whether or not to release the former president's tax records has become a point of contention, with Republicans arguing that doing so would set a dangerous precedent.
Democrats on the panel had argued that the president's tax returns were necessary for the panel to evaluate the IRS's presidential audit program. In response, Trump filed an emergency application on Oct. 31 to block the release. But the the Supreme Court denied Trump's request to block the committee's request, clearing the way for the records to be released.
"We anticipated the IRS would expand the mandatory audit program to account for the complex nature of the former president's financial situation yet found no evidence of that," Neal said. "This is a major failure of the IRS under the prior administration, and certainly not what we had hope to find."
In the committee's separate report, it made recommendations for the future of the IRS presidential audit program and stated: "Congress should codify the mandatory audit program to require the IRS to conduct mandatory audits while a President is in office and publicly disclose related returns and return information."
This is, because, in the words of the Democrat-led panel, "Americans must have confidence that no taxpayer is able to operate above the law. This, of course, extends to the President of the United States, who is the single most powerful public official in the country."
Democrats' fight for Trump's tax returns on a legal front have been ongoing for more than three years, beginning in 2019.
Neal had requested the IRS turn over then-President Trump's tax returns spanning 2013 to 2018, but was denied by the Treasury Department, which oversees the IRS. The department said the request was not supported by a legitimate legislative purpose, NPR previously reported, and was "pretextual."
Republicans warn of dangerous precedent set by report release
The ranking Republican on Ways and Means, Rep. Kevin Brady of Texas, asked committee Democrats to reconsider before the issue was brought to a vote.
"We urge Democrats to turn back while they still can. If they release tax returns today it will be a stain on this committee," Brady told reporters.
Brady also stated that releasing the returns would unleash a new weapon for partisan politicians who would use tax filings against the opposition.
"Ways and Means Democrats are unleashing a dangerous new political weapon that reaches far beyond President Trump, and jeopardizes the privacy of every American," Brady said in a statement last week. "Going forward, partisans in Congress have nearly unlimited power to target political enemies by obtaining and making public their private tax returns to embarrass and destroy them."
Brady added that releasing confidential records wouldn't be limited to public officials, but potentially private citizens, businesses, labor leaders and even Supreme Court justices.
Neal said, following the vote, "This was not about being punitive, it was not about being malicious."
NPR's Halimah Abdullah contributed to this report.
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